After Four Months Of Sideways

Yes, ladies and gentlemen, this market has now gone sideways for the last four months.  And, amazingly, it has still not tipped its hand as to how it wants to proceed with the next multi-hundred point move.

Interestingly, I have to note in this update that the purple count is starting to gain in probability, at least based upon the potential wave relationships I am seeing.  Let me explain.

Thus far, we have seen a 5-wave decline from the recent high.  That 5-wave decline is either the [c] wave of a more protracted b-wave in the final a-b-c rally higher (green), or it is wave 1 down in the c-wave of wave iv in purple.  

Now, if the green count was going to be taking us higher, then the c-wave is usually a standard 5-wave rally.  Yet, the market topped out yesterday as a clear 3-wave rally.  That means that either this rally is corrective in nature (purple), or that wave 1 of the c-wave is taking shape as a leading diagonal.  Since leading diagonals are not terribly reliable in my humble opinion, this is one of the reasons I am considering that the purple count has risen in probability.   And, I will hold that view until ALL five waves of the leading diagonal take shape.

The other factor which I find interesting is if today’s low holds, then we could be developing a c-wave rally in wave 2 of the purple count, which would be pointing us to the .500-.618 retracement region of the purple wave 1 down.

So, for now, the market has still not made a decision as to how it wants to handle this region.  And, you would think that after four months, it would have had ample time to decide.   Yet, here we still are.  So, I have to assume the next several days will finally provide us with some answers.

And, as I noted in an alert earlier today:

“Stay on your toes, as the market has not provided us with a decision yet.   Most importantly, when dealing with these 3-wave structures, remain flexible in your thinking and nimble in your positions.”